Donnish Journal of Economics and International Finance

September 2017 Vol. 3(1), pp. 001-136

Copyright © 2017 Donnish Journals

Original Research Paper

Evaluation of the Relationship between Government Revenue and Public Expenditure in Nigeria

Ojiya, Emmanuel Ameh

(MSC/CC/14/0808)

Author's Email: ojiyaenoch2000@gmail.com

Accepted 28th August, 2017

Abstract

---

This study investigated the relationship between government revenue and public expenditure in Nigeria from 1961 to 2014. The specific objectives are to examine the trend and pattern, the causal relationship as well as the effect of government revenue on public expenditure in Nigeria. Data for the study were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin. Using annual time series data, the study employed Trend Analysis, Unit Root Test, Johansen Cointegration Test, Error Correction Mechanism, Granger Causality Test, Impulse-Response Functions and Variance Decomposition to analyse the data. The results from the study revealed that, there was a long-run equilibrium relationship between government revenue and public expenditure in Nigeria, while the variance decomposition output indicates that oil revenue played the most significant role in explaining the variation in government revenue, expenditure and economic growth in Nigeria within the period studied. In the same vein, empirical evidence revealed a unidirectional causality running from oil revenue and total government expenditure to non-oil revenue in Nigeria and from Oil Revenue (OREV) to Total Government Expenditure (TGEXP) within the period under reference. Major policy recommendations amongst others are that, government should as a matter of urgency take concrete steps towards diversifying the economy into other potential revenue yielding sectors like agriculture, manufacturing, the service sectors and solid minerals development of which Nigeria is naturally endowed in abundance; government should design workable fiscal policy tools aimed at harnessing all direct and indirect tax revenue sources. This is achievable by making tax administration agencies more functional through training and conducive working environment; finally, the various anti-corruption agencies like Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices and Other Related Offences Commission (ICPC) etc should be strengthened and laws promulgated to check the tendency by most Nigerian leaders and bureaucrats to pilfer and misappropriate government funds.

Keywords: Government revenue, Public expenditure, Nigeria.

Read: [Full Text - PDF]

Cite This Article:

Ojiya Emmanuel Ameh. Evaluation of the Relationship between Government Revenue and Public Expenditure in Nigeria. Donnish Journal of Economics and International Finance 3(1) 2017 pp. 001-136.